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The case of King v. Burwell may have been the last legitimate chance to disable the Affordable Care Act. So the Supreme Court’s 6-3 decision in favor of the administration, with only the conservative rump of the Court dissenting in amusingly strident terms, should leave conservatives despondent.
But that’s not quite the case, at least not for many conservatives elected to Congress. If King v. Burwell had gone the other way and wiped out health-insurance subsidies for millions of people in 34 states, the Republican Party—which had been cheering on this lawsuit—would have largely owned the damage. Moreover, Republican members of Congress would have faced enormous pressure to fix the problem.
Former Obama adviser David Axelrod best captured the conventional wisdom that Republicans were best served politically by losing King v. Burwell:
GOPers rail against ruling, but privately are relieved. If court had struck subsidies down, Rs would have been the dogs that caught the car.
— David Axelrod (@davidaxelrod) June 25, 2015
GOP presidential candidates are likely happy to avoid that mess as well—and keep Obamacare intact as the Ultimate Evil they are running to defeat, while highlighting the importance of more conservatives on the Supreme Court. (Chief Justice John Roberts is quickly becoming a conservative bête noire, and one candidate’s brother happened to have nominated him, but that’s a story for another day.
But almost to a person, the major GOP presidential candidates used the decision to focus conservative voters on 2016. Scott Walker tweeted: “We need real leadership in Washington, and Congress needs to repeal and replace #ObamaCare.”
Jeb Bush issued a statement: “As President of the United States, I would make fixing our broken health care system one of my top priorities. I will work with Congress to repeal and replace this flawed law with conservative reforms that empower consumers with more choices and control over their health care decisions.”
Marco Rubio told CNN: “I remain committed to repealing this bad law and replacing it with my consumer-centered plan that puts patients and families back in control of their health care decisions.”
But that’s not the entire story. There are plenty of Republican members of Congress who were no doubt genuinely upset that King v. Burwell didn’t go the other way—conservative ideologues who ran for Congress because of a deep antipathy for the healthcare law. (Representative Dave Brat, the Tea Party insurgent who knocked off Eric Cantor, described himself as “stunned.”)
And as always, this split will continue to trouble the GOP. The hard-core members still have ample opportunity to use real leverage to disable or hurt the Affordable Care Act. At some point this year, Congress will have to pass government spending bills—and there is considerable conservative activism around using the process, which only requires 50 Senate votes, to defund significant parts of the law.
Some more moderate senators are already urging caution, and openly saying the GOP is better served by waiting until 2016 to take on Obamacare. But if the hard-core members, and the base they represent, not to mention ambitious renegades like Ted Cruz, force the GOP’s hand, that dog might start nibbling at the bumper again within a matter of months.
The Senate narrowly invoked cloture on fast-track trade legislation Tuesday morning, setting up a final vote Wednesday that will surely send the bill to President Obama’s desk for his signature.
In so doing, Congress will surrender remarkable authority to Obama and his successors. For the next six years, Congress will be unable to amend any trade deal signed by the president, and only 50 votes will be required for Senate passage—a reduced burden that hasn’t been granted to minimum-wage hikes, equal-pay legislation, gun control, campaign-finance reform, nor any other non-budgetary legislation of the Obama era.
In exchange, these future administrations will promise to be guided by negotiating objectives in the fast-track legislation on human rights, labor standards, and the environment, though many experts and congressional Democrats have decried the objectives as meaningless—in some cases they are satisfied if the president self-certifies that unspecified “progress” was made towards the negotiating goal.
The Senate wasn’t supposed to have to vote again; it passed fast-track legislation weeks ago and sent it to the House. But House liberals rebelled and temporarily killed the House package by voting down a program that provides job training to workers screwed over by trade deals. This program was a Democratic priority, but one they strategically killed in order to hopefully stop the entire fast-track passage.
But House Speaker John Boehner held another vote last week and sent fast track back to the Senate without the trade-assistance program, and so the Senate had to vote again on this bill.
There was substantial doubt that Senate Democrats would back fast track without trade assistance for workers, but they did—resting on assurances from congressional Republicans that they will pass the assistance program soon.
The final vote was 60-37, achieving cloture by the thinnest possible margin. (Three senators were absent; Tennessee Republican Bob Corker was delayed getting to Washington, but said he would have voted for fast track; Senators Robert Menendez and Mike Lee both voted “no” last time.)
After the vote, Senator Sherrod Brown took the Senate floor and declared, “This is a day of celebration in the corporate suites of this country, to be sure.”
Senator and presidential candidate Bernie Sanders added that “this trade agreement was supported by virtually every major corporation in this country, the vast majority of whom have outsourced millions of jobs to low-wage countries all over the world.”
Thirteen Senate Democrats helped get fast track over the line: Michael Bennet of Colorado, Maria Cantwell and Patty Murray of Washington, Tom Carper and Chris Coons of Delaware, Dianne Feinstein of California, Heidi Heitkamp of North Dakota, Tim Kaine and Mark Warner of Virginia, Claire McCaskill of Missouri, Bill Nelson of Florida, Ron Wyden of Oregon, and Jeanne Shaheen of New Hampshire.
Right off the bat, some progressive activists pledged to exact a price for supporting fast track. “The Senate Democrats who allowed Fast Track should know that this vote will be remembered, it will not be erased, and we will hold you accountable,” said Jim Dean of Democracy for America in a statement. “Accountability could mean primaries now or in the future, taking no action in your next difficult election, or support for progressive alternatives in future Senate leadership elections. Make no mistake, the memory of this clear betrayal of working families will follow you for years to come.”
The threat about Senate leadership elections is particularly notable; Senator Patty Murray is reportedly seeking the whip post in the new Senate, and provided a crucial vote for fast track. The current whip and her presumed competitor for the post, Senator Dick Durbin, voted against fast track.
Once fast track passes tomorrow (there is only a 50-vote requirement post-cloture, which this bill will easily achieve) and Obama signs fast track, the fight turns to the highly controversial Trans-Pacific Partnership.
Sometime in the late summer or early fall, the Obama administration will finally release the full TPP text, after the president signs it. After 90 days, Congress can vote on it.
Without question, fast track makes the TPP much more likely to pass. No amendments can gum up the process or chase off support, and we already can easily see there are 50 votes in the Senate based on the fast-track votes. But the House remains no sure thing for the TPP. Fast track twice passed by only two votes.
When the TPP actually comes out, there will be some really ugly details that are likely to enrage liberals and solidify opposition among Democrats. For months the White House has been dodging some criticisms of the TPP by stressing that the text isn’t final, but that will no longer be an option.
The unknown details of the TPP, incidentally, are what Hillary Clinton cites for not yet having an official position on the trade deal. If the Democrat base gets truly riled up when the details do come out, she may end up opposing the deal. This would give cover for every congressional Democrat to do the same.
Members of the House will also be in the thick of their reelection campaign this fall, and increased progressive activism and actual primary challengers will no doubt make a TPP vote even harder.
On the Republican side, Boehner will almost surely have a more difficult time gathering Republican votes for the TPP than he did for fast track. One argument frequently made by Republicans during the congressional fast-track debate was that it benefited the GOP, too—that it was also a vote to give a theoretical Republican president in 2017 immense power to shape trade deals without congressional meddling. That has no application to the TPP debate.
And 2016 will no doubt have the same effect on the Republican side, as incumbents face challenges from opponents to their right who may decide to blast them for supporting Obama’s trade agenda. The presidential race provides more pressure, and we’re already seeing it: Only weeks ago, Ted Cruz voted to move fast track. Tuesday, he released an op-ed on Breitbart.com bashing “Obamatrade” and voted against cloture.
So while progressives lost the fast-track battle, the trade debate isn’t quite over yet. “What [today’s vote] doesn’t mean is that Congress must pass [the TPP],” said Robert Weissman, president of Public Citizen. “When the inexcusable and anti-democratic veil of secrecy surrounding the TPP is finally lifted, and the American people see what is actually in the agreement, they are going to force their representatives in Washington to vote that deal down.”
The House of Representatives threw President Obama’s trade agenda off the rails Friday, dealing Obama arguably his biggest defeat as president—and one that was fueled by sustained opposition from the party’s left flank.
There’s one more vote coming Tuesday before we can officially say fast-track authority is indefinitely dead.
Here’s what happened: The House considered three bills Friday. One was a generally noncontroversial customs enforcement bill. Another was the actual fast-track trade-authority legislation. (You can read the case against that bill here.) And the third was a bill providing trade-adjustment assistance to workers who get screwed over by trade deals. Republicans have long detested trade-adjustment assistance as a wasteful big-government program, and Democrats were not happy with the way it was being paid for.
The way House Speaker John Boehner structured the process along with the Senate, all three bills had to pass or else the entire package would not advance. (If you’re a gambler, think of it like a three-item parlay bet.)
Progressive Democrats who oppose fast track feared it would pass with mainly Republican votes alongside a small number of Democrats, but they sensed an opportunity on the must-pass trade-assistance bill—since relatively few Republicans would back the legislation, it would be much easier to kill by withholding Democratic votes. And if trade assistance goes down, so too would fast track.
And that’s exactly what happened. Minority leader Nancy Pelosi took the floor early Friday afternoon and said that explicitly defeating trade assistance “is the only way we will be able to slow down fast track.” When the votes rolled in shortly thereafter, the trade-assistance bill failed with 302 votes against it and only 126 in favor.
It’s worth stressing here how much progressive organizing had to do with this defeat. President Obama personally appeared in Congress at the last minute Friday morning to appeal to Democrats one more time, on the heels of crashing the congressional baseball game the night before. But Pelosi and Democrats remained unswayed, and in her speech, Pelosi instead credited the work of activists holding members to a “hot stove” back home.
But fast track isn’t quite dead yet. Boehner moved on to the fast-track and customs bills anyway, both of which “passed,” though fast track only got two votes more than it needed. The package still won’t advance without trade-adjustment assistance—but Boehner scheduled a revote for Tuesday.
This will be the final showdown. Democrats would need to triple the yes votes on the bill for it to pass, which seems unlikely, given that Pelosi explicitly embraced the idea of “slowing down” fast track. The administration and its allies will cynically beat them up for blocking assistance to workers displaced by trade deals, despite the clear strategic preference by Democrats to stop fast track. But if progressives hold strong, then fast track is over for now. (The other option would be for over a hundred more House Republicans to flip and back trade assistance, but that seems unlikely in the extreme, especially since the powerful Heritage Foundation is scoring this as a key vote.)
Liberal activism created a vote on Friday that few people saw coming. If liberals keep up the pressure for four more days, there will be no discernible path forward for either fast-track or the TPP.
The day is upon us: After months of increasingly heated debate, the House of Representatives will vote Friday on granting fast-track trade authority to President Obama and his successors in the White House. The Senate has already passed fast-track legislation, and if it gets through the House this week, it makes the controversial Trans-Pacific Partnership a near-lock to pass sometime later this year.
For that to happen, Republicans will have to hold defections to a minimum, because only around 20 Democrats are expected to vote for the bill. Why has fast track raised such consternation among labor groups, economists, and progressive activists?
We’ve tried to distill all the basic objections here. The White House and leading Republicans have had ample forums to make their case for fast track, and plenty of outlets have duly presented the pro-trade arguments. But here’s the case against fast track.
Remember—this just concerns the actual granting of trade promotion authority, which is what Congress is considering Friday. Objections to the actual TPP pact are far more voluminous, and for another day.
It’s not that enforceable. Fast-track authority is a basic bargain between Congress and a president: Legislators give away the power to amend trade agreements so that it’s easier for presidents to negotiate them without fear that all the delicate compromises will be changed by Congress after the fact. (It also agrees to lower the vote threshold for passage in the Senate—more on that rather dubious concession later.) In exchange, Congress writes in all sorts of objectives the president is supposed to follow when he or she is crafting trade deals.
But Democrats have repeatedly raised concerns that the objectives in the bill are basically just gentle suggestions that the president can freely ignore.
Representative Sander Levin, the ranking Democrat on the House Ways & Means Committee and a key player in several past trade deals, has been blasting this fast-track deal as a downgrade from past agreements. “On all of the major issues in the negotiations, the negotiating objectives are obsolete or woefully inadequate,” he said on the House floor last month. “They are basically a wish list.”
Take, for example, the objective on human rights. House Republicans claim fast track “recognizes the importance of trade agreements in advancing human rights and supports and includes a negotiating objective aimed to ensure implementation of trade agreement commitments to strengthen good governance, transparency, the effective operation of legal regimes, and the rule of law, which promote respect for human rights and create more open democratic societies.”
Sounds good! This is the sort of thing Obama points to when he says he has made “rigorous trade enforcement a central pillar of US trade policy.” But how rigorous is it? A closer look at the language shows the president must only “take this objective into account” when negotiating a trade deal. And it’s deemed achieved when the president writes a letter “asserting that the agreement makes progress in achieving” the human rights goals, or any others.
So Obama, or President Scott Walker, can just issue a statement saying he did really think about this objective when negotiating a trade deal, and that the resulting deal made “progress in achieving” it—not that it actually achieved anything.
That’s why many Democrats worry Congress is giving away its ability to shape trade deals without any real assurances in return. It wouldn’t be anything new—as Public Citizen notes, the fast-track authority used to pass NAFTA and create the WTO included objectives on labor standards, none of which were actually reflected in the resulting trade legislation. Similarly, the 2002 fast-track legislation had objectives on currency manipulation that never appeared in any of the trade pacts that followed. And the Obama administration’s record on enforcing trade deals is already not good.
Moreover, the objectives in the fast-track bill have gotten worse in the House compared to the Senate version. Representative Paul Ryan successfully attached a new negotiating objective late Tuesday night—one that specifically instructs the US trade representative to ignore action on climate change while negotiating future trade deals. Specifically, it “ensure[s] that trade agreements do not require changes to US law or obligate the United States with respect to global warming or climate change.” The only small consolation here is that maybe future presidents can ignore this objective, too.
Fast-track comes way too late for TPP. Debates about the enforceability of fast-track provisions are crucial for all of the upcoming trade deals over the next six years, which is how long this authority lasts.
But for TPP, it’s a bit beside the point. Negotiations have been going on for years, and are very close to being completed. Some chapters are already done—Representative Levin told me last month when he objected to the controversial investor-state chapter of TPP, US Trade Representative Michael Froman told him it was already “closed.”
So Congress is telling Obama what they’d like him to negotiate after he’s already done it. Because of the unusual timing of fast track, many Democrats feel like they are being bedded without a kiss on TPP.
Fast-track lasts too long—and could empower the deregulatory agenda of a Republican president. When Senator Elizabeth Warren said fast track could result in the Dodd-Frank financial reforms’ being gutted, the White House got pretty mad. But Warren was unequivocally correct.
We broke this down at length here, but it can be straightforward: Trade deals have the opportunity to be really bad, and fast track neuters congressional input for six more years, which will include Obama’s successor and maybe even the person after that, if the next president serves only one term.
Warren specifically pointed to the TTIP, a big trade deal being worked up with Europe that could use “financial harmonization” rules to weaken several key aspects of Dodd-Frank. We know this is possible for many reasons, not least because top Obama officials have been saying publicly that they are fighting against specific provisions that would weaken Dodd-Frank. That’s nice, but President Scott Walker probably won’t follow suit.
And right in the middle of this debate, the Canadian Finance Minister floated the idea of challenging the Volcker Rule—a key Dodd-Frank component—under the dispute resolution process in NAFTA, which served as an exclamation point to the assertion that, yes, trade deals can weaken financial reform.
The White House spin on this has been woeful. It points to a provision in the fast-track legislation “includes language that expressly forbids changing US law without Congressional action.”
Those are a lot of tough words grouped together that have no meaning in reality. All trade agreements change US law—the implementing language of a trade bill is basically just a bunch of changes to US law, which could easily touch financial reform. The passage in question here is more or less a throwaway disclaimer that means, in effect, that if for some reason the implementing language goofs up and doesn’t adequately change US law to fit the trade agreement, the US law remains superior in domestic courts. (But not under international law.)
By passing fast track, congressional Democrats are making a huge gamble that no Republican occupies the White House for the next six years. Because if one does, Democrats won’t be able to amend his or her trade deals and will have limited capacity to stop the final vote.
Fast-track is really hard to stop. Obama has frequently said that fast track isn’t final; that if Congress decides the process is being abused it can just disengage fast track. That’s technically true, but awfully difficult in reality.
What would need to happen: Either the House Ways & Means Committee or the Senate Finance Committee could vote no on the implementing language of a trade deal. (This already is rather unlikely given both committees are heavily stocked with free-trade hawks.) This automatically generates a resolution to disengage fast track for that trade bill, but that resolution is not privileged, meaning that even in the unlikely case where one of those committees acts, either John Boehner or Mitch McConnell can simply ignore the resolution that disables fast track. Alternately, any member can offer a resolution to end fast track—but both of the aforementioned committees have to approve it, and then both chambers must vote on it within 60 days.
These are extremely unlikely scenarios, and far more onerous than past legislation. The 1988 fast track that led to NAFTA allowed either committee to end fast track with a simple majority vote—no further floor votes needed.
The fast track package also cuts Medicare. The House will consider three bills as part of an overall fast track package Friday, and one provides assistance to workers “displaced” by trade deals. (In Washingtonspeak, this means they lose their jobs.) But the financial aid, which Republicans hate, is paid for in part by cuts to Medicare.
For all the objections, this may be the one that actually stops fast track in the House. Democrats are rebelling against the bill, because they (correctly) assume that voting not only for a free-trade deal, but one that cuts Medicare, is political poison. Boehner has said he will not proceed to the actual fast-track bill if the trade assistance bill fails, and so this could doom the entire effort.
Why does fast track eliminate the filibuster so selectively? Proponents of fast track argue persuasively that a president cannot negotiate enormous, complicated trade deals with several other countries unless everyone involved believes that the US Congress won’t come in at the end and start changing everything.
But fast track has two parts: it also lowers the vote threshold in the Senate to 50 votes. Why? I have not heard a single persuasive answer to this question.
Think of all the things that have fallen victim to the 60-vote requirement in the Senate: a minimum-wage increase to $10.10 an hour nationally last year (It got 54 votes, but “failed”), Obama’s $447 billion jobs package that “failed” in 2011 (51 votes). Gun control legislation post-Newtown didn’t make it either (54 votes in favor). An equal-pay law in 2014 fell short with 52 votes.
The examples are bountiful, stretching back to Obama’s first term—remember when the House passed serious campaign reform in the Disclose Act, which got 59 votes in the Senate, just one short of passage? There would almost surely be a public option in the Affordable Care Act if 60 votes were not required in the Senate too. (The House version included it, and Joe Lieberman singlehandedly thwarted it in the Senate.)
The 60-vote requirement in the Senate is arguably the single biggest foil to the Obama-era progressive agenda. Only now—for a trade deal molded and favored by corporate elites—is it finally being scotched. Why?
Roughly six months after it began, a campaign to persuade Elizabeth Warren to run for president is shutting down. The founders of Run Warren Run announced in a Politico op-ed Tuesday that the group would deliver one final petition to Warren’s office and close up shop.
So was the campaign successful? Since the bottom-line goal was to persuade Warren to run, and she clearly will not, the answer would be an obvious no. “The central focus for us was always trying to convince Warren to run,” said Ben Wikler, the Washington director of MoveOn, which operated Run Warren Run alongside Democracy for America. “We reached the point where another month or another three months encouraging her to run wasn’t going to make her change her mind.”
But before Run Warren Run becomes a footnote to the 2016 election saga, it’s important to take stock of what the draft movement has accomplished and the role it has played in Democratic politics. (And, it should be noted, the draft movement isn’t totally over—the organizers of Ready for Warren, a group managed by former Obama campaign staffers, confirmed to The Nation that they will press onwards.)
When the campaign kicked off back in December, nobody was quite sure what kind of campaign Hillary Clinton might run—but progressives were plenty nervous about it, and with good reason. Insider reports indicated that the Clinton camp might frame her candidacy as a fight against “Washington gridlock,” which can fairly be read as rapprochement with Republicans and the big-money interests that regularly gum up the works in DC.
There were also persistent suggestions from anonymous Clinton aides in Beltway publications that Clinton might not even debate during the Democratic primaries. Coming on the heels of a summer book tour where Clinton didn’t speak to a single progressive or left-leaning outlet, many liberal activists worried Clinton simply didn’t care about them or their concerns.
Fast forward to today, where Clinton has unmistakably moved to the left. She voiced support for a $15 minimum wage and has flirted with the idea of debt-free college, two organizing goals of the left. She also backed a constitutional amendment to Citizens United and has frequently talked up the problem of income inequality, starting with her announcement video where she noted that the “deck is still stacked in favor of those at the top,” a clear echo of Warren’s rigged-game framing. She neglected to endorse the Trans-Pacific Partnership trade deal (though she hasn’t opposed it, either). And her first big campaign speech later this month will be deliberately tied to the legacy of FDR.
There’s still considerable skepticism of Clinton’s desire to become a true populist, particularly among liberal donors, and she hasn’t said much so far about truly taking on and reforming the financial sector. But any plans to run a truly centrist campaign have clearly been abandoned.
So what happened between December and now? Run Warren Run organizers argue it was their campaign that focused Beltway insiders—including those plotting the Clinton campaign—on the concerns of the left, using Warren as an avatar.
“Most of the credit goes to Warren herself, but we think that by putting the possibility of her running on the table, we created a situation where everyone had to pay attention,” said Wikler.
Warren herself didn’t want anything to do with a presidential campaign—she said no over 50 times, and her office was proactive in trying to swat away speculation. But Run Warren Run went ahead and built her a mini-campaign anyway, hiring staffers in key states and opening up offices in Iowa and New Hampshire, while organizing liberal voters along the way—the petition Run Warren Run will present next week has 365,000 signatures.
This formalized challenge from the left was surely not the sole reason Clinton abandoned a centrist campaign launch: During those months John Podesta, the former head of the Center for American Progress, also joined the campaign’s top leadership. It’s also possible the nascent campaign’s internal research and polling simply showed that a populist campaign was the best practical approach to gathering votes.
But Run Warren Run was still a nontrivial part of the political ecosystem that produced the Clinton campaign’s priorities, and though Warren is not running, the organizers take solace in that.
“Our goal from the very beginning was to raise up her voice,” said Neil Sroka of Democracy for America. “Her ideas are on the ballot, and candidates are struggling to represent her.”
When we last checked in with the activist push to make debt-free college part of mainstream Democratic politics, a little over one month ago, it was off to an impressive start. Three Democratic Senators and a handful of House members had signed on to bicameral resolutions championing the idea, including high-ranking Democrats like Steve Israel and Chris Van Hollen.
More members signed on in the following weeks, and the Progressive Change Campaign Committee (PCCC), which is spearheading the effort, announced Wednesday that nine more Democratic Senators joined as co-sponsors. This brought the total to twenty in the Senate—close to half the caucus—and sixty overall.
That’s a pretty stunning level of support behind an idea that basically didn’t exist in formal terms six weeks ago.
The Congressional resolutions, and an attendant policy paper from Demos, lays out in in brief terms how more federal aid to states for tuition assistance, expanded Pell Grants, and some smaller-bore tweaks and reforms might produce a debt-free college experience at public universities nationwide.
The proposals need a lot of fleshing out. The level of support, though swift and dramatic, still wouldn’t be enough to pass a Democratic Congress, let alone one controlled by Republicans.
But the tentative goal of the activists pushing the campaign is to get the idea percolating in Democratic circles—until it becomes a mainstream policy plank. “It’s all about encouraging the Democratic Party to lead on big, bold economic populist ideas,” said TJ Helmstetter of the PCCC.
The biggest arena for these ideas, of course, is the upcoming Democratic presidential primaries. The push has gained some ground here, too—former Maryland governor and presumed candidate Martin O’Malley has openly joined the cause.
Hillary Clinton, meanwhile, has appeared to at least be conversant with the idea. Her campaign manager, Robby Mook, dropped the term “debt-free college” in a recent CNBC interview, and Clinton herself hedged closer to calling for it in a recent campaign appearance, where she said college should be “as debt-free as possible.”
Senator Bernie Sanders, however, has not joined the Senate effort nor has he spoken publicly about debt-free college—instead, he has a plan to make four-year public colleges and universities tuition-free, also through federal assistance to states, and paid for by a Wall Street transactions tax. Sanders introduced that bill in the Senate last week. Proponents of the debt-free college plan prefer their approach because it targets all higher education debt held by college students, including housing, books, and transportation.
Read Next: George Zornick on the imaginary public support for Obama’s trade agenda
As the White House mounts an increasingly harsh rhetorical war on Democratic opponents of President Obama’s trade agenda, a treasured talking point has emerged: The public actually supports the administration.
In a Wednesday Politico piece titled “Barack Obama’s war on the left,” we have this:
West Wing aides point to last week’s NBC News/Wall Street Journal poll that showed deep and wide Democratic support for trade. Obama’s own poll numbers are up. And so a president who views his left-wing detractors as knee-jerk ninnies (as opposed to his view of himself as a true progressive who never acts out of politics, only taking positions because he’s thought things through more thoroughly than his opponents) has decided to let loose, they say.
In another Politico piece from last week, in which White House aides anonymously suggested Warren was just trying to hype the Draft Warren movement, the polls came up again:
“Are [Warren’s] arguments a sign of desperation given the tide shifting among the public, particularly Democrats?” one person close to the White House said, citing recent poll numbers showing the public growing less wary of possible negative effects of international trade accords.
If one actually looks up the NBC/Wall Street Journal poll in question, however, it is hard to find the peg the White House is hanging its hat upon.
The first shows a 37-31 split between, respectively, those who believe free trade has helped the United States and those who believe it has hurt, with 25 percent saying there’s been no difference and 7 percent unsure. The trend lines are towards a more positive view on trade, but the split is still pretty close. (I’m not sure where the White House aide got “deep and wide;” there are no party crosstabs in the public version of the poll. Perhaps they have another.) It still doesn’t seem like anything that would drive Warren or Sherrod Brown to desperation.
But most importantly, it doesn’t actually ask about TPP—just the idea of free trade in general. The next question doesn’t either, but rather asks about NAFTA, where there is a rather uninspiring 29-26 split in favor of the position that the trade deal had a positive impact. (That’s within the margin of error for the poll.)
Polling on the specifics of TPP can be hard to find. Many surveys are over a year out of date, and almost useless given how much information has come out about fast track and TPP since then. That said, this Hart Research poll from January 2014 shows the public opposed fast-tracking TPP by a wide 62-28 margin. It was conducted on behalf of groups that oppose TPP, though I think the description of fast track in the question was pretty accurate and fair.
Somewhat more recent results, from Pew in September of last year, found 20 percent of Americans think trade has led to job creation, while 50 percent disagree.
Other polls have clearly slanted questions, in either direction, and aren’t very indicative. But the bottom line is there’s no clear measure of public support for fast track nor the TPP. So what is the White House talking about?
Read Next: George Zornick on whether fast track could destroy Dodd-Frank
Senator Elizabeth Warren opened up a new battle in the war against the Obama administration’s trade policy last week, when she charged that the fast-track trade authority now being considered by Congress could ultimately allow a Republican president to gut many of the Dodd-Frank financial reforms.
This provoked a heated response from the White House and its allies, who not only disputed Warren’s claim but bizarrely (and under the cover of anonymity) suggested she was just trying to juice up the Draft Warren presidential movement.
So who’s right? This is an important question to litigate, as the Senate prepares to vote on fast-track authority Tuesday.
The short answer: Warren. All it would take is a Republican president and Congress (or any president and Congress inclined to weaken financial regulations), and indeed fast-track authority could be used as a glide path to dismantle not only Dodd-Frank but potentially other important regulations as well.
First, what is fast track?
Presidents generally want to negotiate trade pacts with a promise to other countries that the US Congress won’t later change what they agreed upon, and so they ask Congress to pre-approve Trade Promotion Authority (TPA), colloquially known as a fast track. The fast-track legislation now up for a vote in Congress says that for the next six years, any trade deal proposed by an administration cannot be amended. The deals also cannot be filibustered in the Senate, and would pass with a simple-majority vote.
In exchange for ceding this authority, Congress writes into the fast-track bill all kinds of requirements about what it wants to see in future trade deals: This version of the legislation, worked out between Senators Orrin Hatch and Ron Wyden and Representative Paul Ryan, has a number of guidelines on environmental, labor, and regulatory standards.
Democrats complain that in the case of the Trans-Pacific Partnership, the fast-track guidelines come too late—much of the deal has already been agreed upon. In fact, when I spoke with Representative Sander Levin last week, he said that when he raised concerns recently with the US Trade Representative about TPP’s highly controversial investor-state dispute process, he was told that the TPP chapter on it is already “closed.” (A representative for USTR declined to comment on the record.)
There is also a near-universal belief among congressional Democrats that guidelines in the fast-track bill are far too soft—that they are much more suggestion than requirement. This is of great concern since fast-track authority will almost certainly be in effect for six years, spanning not only the rest of Obama’s term but the first term of the next president, and some of the following president’s term as well, if Obama’s successor is voted out after four years.
It’s that unease Warren is speaking to when she raises concerns about fast track and a Republican president. “[H]e wants us to vote on a six-year, grease-the-skids deal,” she told NPR this week. Congress is making a blind promise of faith here, particularly if you believe—as most Democrats do—that this fast-track bill doesn’t really force the White House to adhere to very much. And beyond TPP, Senator Orrin Hatch said there are 43 different trade bills that could pass in this six-year window.
The final thing to understand about fast-track authority is how unique it is during this era of gridlocked American legislating. Over the past several years, spending on lobbying has actually decreased as Congress routinely fails to agree on much beyond basic funding of the government and naming some post offices. Trade deals contain vast amounts of regulation and economic rulemaking, and fast-track authority is like a magic-carpet ride through the deadlocked Congress.
How specifically could Dodd-Frank be changed?
Warren pointed to the Transatlantic Trade and Investment Partnership (TTIP), a proposed trade deal between the United States and the European Union that’s been under negotiation for several years.
Major financial institutions have been lobbying heavily on this deal—which is not surprising, since the major financial centers in the United States and Europe would be affected. JPMorgan Chase, MasterCard, Citigroup, Wells Fargo, and VISA have all lobbied Congress on fast track and TTIP, along with TPP, in the past six months, according to company disclosure forms.
What might they want? Like with TPP, we don’t know all the details of TTIP yet, but advocates have many fears. One is that the Federal Reserve’s plan to impose separate liquidity requirements on foreign banks might be scotched; Inside US Trade reported in 2013 that the EU wanted to address that rule, which it thinks is “discriminatory.” Liquidity requirements were a crucial part of Dodd-Frank and force banks to have a certain level of assets they can sell off in the event of a crisis. European regulators have traditionally taken a lighter touch on such requirements. That same report suggested that compliance rules on derivatives—another key part of Dodd-Frank—were under negotiation.
Relatedly, there is a fear common to many trade deals: If TTIP is enacted with lower financial regulations than what exist under Dodd-Frank, and with exemptions for foreign banks, American banks could reincorporate in signatory countries to sidestep US regulations.
And it’s not just Dodd-Frank: the leaked EU proposal for TTIP has a provision that new regulations first be “analyzed” to determine if they have an unacceptable impact on trade. Americans for Financial Reform (AFR) worries that this could “impose a presumption that regulations must be judged on the basis of their trade impact rather than their effectiveness as public interest policies promoting financial stability.”
Reported talks on “regulatory cooperation” would mean regulators in different countries have to consult each other on new rules before respective legislative bodies are presented with a reform. AFR has said, “At best, this mechanism would delay implementation of needed financial reforms. At worst, it would result in a watering down or outright blockage of said reforms.”
So why does Obama think Warren is wrong?
I reached out to the US Trade Representative’s office, and was directed to a statement from the Treasury Department that “The Dodd-Frank Act is a signature achievement of the Obama Administration that the President fought long and hard to pass into law. Nothing we’re doing in any of our trade agreements would weaken our ability to implement Wall Street Reform now or in the future.”
I was also guided to a quote from Obama, when he told members of Organizing for American that “every single thing we’ve done—from Obamacare, to Wall Street reform, to student loan reform, to credit card reform, to fighting for a fairer tax code, to higher minimum wages, to a smarter workplace—all it’s focused on making sure it’s a good deal for middle-class families and folks who are working hard to get into the middle class.”
Let’s file that response under “not detailed nor convincing.”
It is true, however, that the Obama administration has drawn a hard line on gutting Dodd-Frank through TTIP; Treasury Secretary Jack Lew said in late 2013 that he opposes including financial services in TTIP because “Normally in a trade agreement, the pressure is to lower standards on things like that and that’s something that we just think is not acceptable.”
That’s comforting, but also a frank admission that TTIP could indeed weaken financial regulations. Warren’s point isn’t that Obama might do it, but that President Scott Walker would decline to take the same hard line against deregulation.
There’s one other rebuttal made by administration allies. Here’s Politico’s Ben White: “The problem, White House and pro-trade officials on the Hill say, is that the fast-track bill currently before Congress includes language that expressly forbids changing U.S. law without congressional action.”
That claim is highly misleading, and has unfortunately been repeated in several other outlets. Trade deals, by their very nature, change US law—that’s the whole point.
Specifically, this happens when Congress passes the implementing legislation of the trade deal. The fast-track legislation makes clear that “if changes in existing laws or new statutory authority are required to implement” a trade deal, then the implementing legislation will include provisions “either repealing or amending existing laws or providing new statutory authority.” When Congress passes a trade deal, it changes US law at the same time, and it should be noted that those changes to the law are inherently also on a fast track.
Therefore the provision cited by the administration—that says trade deals can’t change US law without congressional action—is a total misdirection and one White House officials should be embarrassed to advance. It’s a relevant point, right up until it becomes completely irrelevant.
That provision exists just in case the implementing language doesn’t sufficiently change US law, though it almost surely would. But it still only applies to domestic law, meaning that people couldn’t challenge an American bank in a US federal court for violating a trade deal.
Ben Beachy of Public Citizen pointed out to me, however, that international law still very much applies—and that trade agreement partners could use international tribunals to sanction the United States until it changed its laws to conform to the trade deal it signed onto.
But would President Walker actually do it?
The fairest critiques of Warren’s allegation acknowledge that fast track and future trade deals could indeed weaken Dodd-Frank, but that a Republican president might not choose that route. That came up in some of my conversations with pro-trade officials, and can be found in other media accounts as well.
“[T]he new president would likely just choose to roll back Dodd-Frank directly through changes to U.S. law, with ordinary legislation through the Republican-controlled Congress, assuming the GOP maintains control of both the House and Senate after 2016. No trade deal or fast track would be needed to take that route,” wrote William Mauldin in The Wall Street Journal. Matthew Yglesias made a similar point at Vox, and added that the hypothetical Republican president could also weaken or undermine Dodd-Frank through regulatory discretion.
That’s true enough, but remember that fast track is a much easier glide path for changes than a simple congressional bill to repeal all or part of Dodd-Frank, which would presumably go through the normal committee and amendment process in Congress, and face a 60-vote threshold in the Senate. The only advantage to the congressional route is that it (might) be quicker, if President Walker feels he has the votes, as opposed to concluding TTIP negotiations and waiting for Congress’s 90-day review under fast-track.
President Walker might also choose to weaken financial reform through lax regulation, but that isn’t mutually exclusive to seeking changes through TTIP—particularly because lax enforcement only lasts as long as Walker is in office, whereas the trade deal would be binding in perpetuity.
Moreover, many of the ways TTIP would weaken financial reforms are oblique. Regulatory cooperation and rules that encourage US banks to reincorporate in lesser-regulated countries aren’t labeled with bright-red “REPEAL DODD-FRANK” language. They are also attached to a trade bill, which generally would generate more overall, bipartisan support than a simple measure to repeal Dodd-Frank.
One final point: It’s not just Dodd-Frank. Remember those 43 trade deals Hatch spoke about. Important environmental and labor regulations could be at risk through this same fast-track process as well. Warren is focused on financial reform because it’s her wheelhouse—and if I had one major critique of her comments, it would be not that they are overstated but that they are not broad enough.
Read Next: George Zornick on Bernie Sanders’s bill to break up the big banks
Senator Bernie Sanders announced legislation Wednesday that would break up the country’s largest financial institutions. It’s the third time he’s introduced such a measure, but this time around he wields the large microphone of a presidential candidate.
The bill, titled the “Too Big to Fail, Too Big to Exist Act,” will also be introduced in the House by Representatives Brad Sherman and Alan Grayson. If passed, it would require regulators at the Financial Stability Oversight Council to come up with a list of too-big-to-fail institutions whose failure would threaten the economy. One year later, those banks would be broken up by the secretary of the Treasury.
Sure to be included on that list, based on the standards outlined in the legislation, would be JPMorgan Chase, Citigroup, Goldman Sachs, Bank of America, and Morgan Stanley.
The theory, according to Sherman, is that with an assured government-led breakup on the horizon, the banks would divide themselves into smaller companies by themselves during that year so as to set their own terms for winding down.
The bill would also prohibit banks on the list from using insured deposits for any kind of speculative activities or hedging. “The function of banking should be boring,” Sanders said during a press conference in the US Capitol.
The prospects of this bill passing in a Republican-controlled Congress approach absolute zero. Sanders acknowledged that reality, but said the legislation presents a basic test for legislators.
“When Wall Street tells members of the Congress not to do anything that will damage their interests, most members of Congress adhere to that,” he said. “Can we pass legislation in the United States Congress that Wall Street opposes?”
It also unavoidably poses a test for Hillary Clinton, the other declared Democratic candidate. Much of the Draft Warren movement launched by progressive activists focused on the Massachusetts senator’s advocacy for combating the financial sector’s power generally, and breaking up the big banks in particular—and Clinton’s perceived weakness on that front.
Sanders swatted away questions about the presidential race, saying he was “not here to talk about Hillary Clinton.” But he did sideswipe Bill Clinton’s record on Wall Street at one point. “I was one of the leading opponents of Alan Greenspan, Robert Rubin, and Larry Summers, who all told us how wonderful it would be if we deregulated Wall Street back in the 1990s,” Sanders noted.
Another likely Democratic candidate, former Maryland governor Martin O’Malley, wrote an op-ed in The Des Moines Register in March that also called for the biggest financial institutions to be broken up.
Elsewhere, Senators Sherrod Brown and David Vitter have introduced similar legislation in the past, and the Federal Deposit Insurance Corporation’s Tom Hoenig also favors break-ups.
Sanders and Sherman cited the danger posed to the economy by big banks, many of which are dramatically larger than they were before the 2008 financial crisis. JPMorgan Chase, for example, has increased its assets by $1.1 trillion since 2007.
“In 2008 we learned that if Wall Street calls and says ‘bail us out or we’re going to take the economy down with us,’ that even if there is no statutory provision for bailouts, which there really isn’t today, Congress will pass as we did in 2008 a bill mandating the bailout,” said Sherman. “So ‘too big to fail’ means you will be bailed. That isn’t capitalism. That is socialism for the wealthy.”
Sanders noted the large fines and settlement paid by big financial institutions since 2009, totaling $176 billion, and referenced former attorney general Eric Holder’s frank admission in 2013 that some banks are “too big to jail.” (Holder later walked back that comment, though no high-level executives have gone to prison for anything related to the financial crisis.)
The duo also described their belief that big Wall Street banks are crushing smaller and medium-sized banks. Sherman cited research from the International Monetary Fund that when big banks have implicit taxpayer backing, their access to capital is so much easier that it amounts to an extra $83 billion annually—something he argued was an unfair advantage over smaller banks that would be allowed to fail.
The Independent Community Bankers of America, which represents 6,000 smaller banks, has endorsed the Sanders-Sherman legislation.
Beyond just small banks, Sanders argued that enormous financial institutions harm the broader economy because those smaller banks are key sources of capital for small businesses. “Wall Street cannot be an island unto itself separate from the productive economy,” he said.
Read Next: George Zornick on the Dems challenging Obama to release the TPP text
President Obama this week stepped up pressure on his fellow Democrats to approve fast-track trade authority that would ease passage of the Trans-Pacific Partnership, at times strongly criticizing what he deemed “dishonest” claims—and Saturday, two leading Senate liberals responded.
Senators Elizabeth Warren and Sherrod Brown sent Obama a letter demanding that he release the bracketed negotiating text of TPP before Congress votes on fast-track authority. The duo noted that even George W. Bush released the texts of the Free Trade Agreement of the Americas “several months” before congressional action was required, and asked Obama to do the same.
In comments to reporters Friday, Obama said “The one that gets on my nerves the most is the notion that this is a ‘secret’ deal.” In a shot widely interpreted as directed at Warren, he said: “Every single one of the critics who I hear saying, ‘this is a secret deal,’ or send out emails to their fundraising base saying they’re working to prevent this secret deal, can walk over today and read the text of the agreement. There’s nothing secret about it.”
Warren and Brown took this claim on directly in their letter:
In recent remarks, you suggested that critics of the TPP are “dishonest” when we claim that TPP is a “secret deal.” Even though negotiations over TPP are largely complete, your Administration has deemed the draft text of the agreement classified and kept it hidden from public view, thereby making it a secret deal.
As a result of your administration’s decision, it is currently illegal for the press, experts, advocates, or the general public to review the text of this agreement. And while you noted that members of Congress may “walk over…and read the text of the agreement”—as we have done—you neglected to mention that we are prohibited by law from discussing the specifics of that text in public.
While experts, the public, and the press are not allowed to review the latest draft of the TPP, executives of the country’s biggest corporations and their lobbyists already have had significant opportunities not only to read it, but to shape its terms. The Administration’s 28 trade advisory committees on different aspects of the TPP have a combined 566 members, and 480 of those members, or 85%, are senior corporate executives or industry lobbyists. Many of the advisory committees—including those on chemicals and pharmaceuticals, textiles and clothing, and services and finance—are made up entirely of industry representatives.
They went on to call for the bracketed negotiating texts to be released before fast-track approval is granted. “The American people should be allowed to weigh in on the facts of the TPP before Members of Congress are asked to voluntarily reduce our ability to amend, shape, or block any trade deal,” they wrote.
Warren and Brown also noted that the fast-track bill being considered in Congress now could be in effect until 2021, meaning future presidents (i.e., President Scott Walker) could use the authority it grants to ram through even worse trade deals with no amendments possible, and a low vote threshold.
The fast-track legislation has passed both the House Ways & Means Committee and the Senate Finance Committee, and awaits full floor action in the coming days.
Warren and Brown’s letter can be seen in full here:
Read Next: George Zornick on President Obama’s unusual phone conference about TPP.